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By Pete Mugleston | Mortgage Advisor

Pete has been a mortgage advisor for over 10 years, and is regularly cited in both trade and national press.

Updated: 9th September 2020*

Guarantor Calculator
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How guarantor mortgage affordability works:

The whole process of applying and qualifying for a guarantor mortgage is often not as straightforward as many like it to be. Although the guarantor isn’t actually on the mortgage deeds and doesn’t own the property, the guarantor is still assessed in the same way as an applicant (credit score, income, age, other commitments such as mortgages, credit cards, loans etc).

In order to work out how much the guarantor can afford, lenders look at both the income and outgoings of the guarantor. Currently in the UK, guarantor income is assessed on employment basic income, overtime, bonuses, and self-employment income (usually 2-3 years trading is required as a minimum). At present, if you wanted an estimate of the maximum available borrowing on a guarantor mortgage, UK lenders tend to multiply the income by 4 (e.g. A salary of £30,000 pa would elicit a maximum lend of approximately £120,000). There are however, some lenders that can lend up to 5x income. The borrowers personal income usually isn’t included in any calculations.

The mortgage term (length of the mortgage in years), is usually limited to the guarantor’s circumstances because more often than not, the guarantor is older than the main borrower. Most lenders will restrict the mortgage term to the oldest applicants retirement age (say, 65), and therefore in some cases when a 25 year old couple want a 40 year mortgage but their guarantor is 40, they have to limit it to 25 years to fit in with the guarantors retirement age. Consequently, shortening the term by a significant number of years can make the monthly payments much more costly every month.

However, there are a few lenders that understand this problem and will allow the full mortgage term applied for, as long as the guarantor is removed within a certain amount of years, for example. Bear in mind that some lenders will cap guarantor mortgage terms to 25/30 years regardless of age, so this must be factored in when considering your monthly budget.

Borrowers sometimes don’t need ANY income:

A major benefit to having a mortgage with guarantor is that in some cases, the borrower doesn’t need to prove ANY income at all. This can help people like the newly self-employed, university students, or even the unemployed to get on the property ladder. Mortgages with guarantor arrangements are becoming increasingly accessible for first time buyers or home movers upsizing to a bigger property, as lenders start to push back into the market they retreated from 4 or 5 years ago. Which mortgage is right for you will depend on a number of factors, so make an enquiry and one of the experts can find you the best guarantor mortgages 2014 has to offer. Make an enquiry now…

If you want to apply for a mortgage with a guarantor, maybe you want to know if you’re eligible or you’re looking for the best deals, please get in touch and one of the experts will be in touch ASAP. If you require help immediate assistance please call 0808 189 2301.

Updated: 9th September 2020
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FCA disclaimer

*Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The info on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.